Management Power of Employers in the Dominican Republic
In the Dominican Republic, the employment contract may be modified as a consequence of the provisions in the Labor Code and subsequent labor laws, collective bargaining agreements, or mutual consent.
Also, the employer is allowed to enforce necessary changes to the employment agreement, as long as they do not imply an unreasonable exercise of this power, alter the essential conditions of the contract, or cause material or moral damage to the employee. That means that the change cannot negatively affect the employee by decreasing or eliminating any rights or benefits.
Such a change would be considered an abusive exercise of the management power (in our country, we use the Latin phrase “ius variandi”), which is the employer’s right to change the working conditions unilaterally, even against the will of the employee, by a justified need. The abusive modification of the employment contract could lead to a breach thereof, with full employer liability. The abusive use of the management power can be just cause for the resignation of the employee.
In our country, this is one of the most significant labor-related topic: the management power of employers and the limits established to such power by our legislation. In general terms, this power may be defined as the possibility for employers to regulate on a discretionary basis the manner in which employment relationships should develop.
In the Dominican Republic, this aspect is regulated under articles 40 and 41 of the Dominican Labor Code. Article 40 of the Labor Code states that employers’ management powers should be exercised on a functional basis. Moreover, it establishes that the management power should serve the company’s interests and the production needs, to the extent that the conservation and improvement of employees personal and economic rights are not negatively affected by this power.
Article 41 of the Labor Code declares that employers are entitled to put in place any necessary changes for purposes of the adequate provision of services. But such changes should not entail an unreasonable exercise of such management powers, nor imply a disruption to the essential conditions of the employment contract or cause material or moral damages to employees.
Based on the preceding, it is clear that the Dominican law provides for the existence of management powers in favor of employers. Such powers materialize in the employers’ right to determine the manner in which their companies should be organized, as well as in the operational, technical and disciplinary guidelines on which company’s operations should rely.
Thus, any changes to the conditions of the labor agreement issued by employers with basis on their management powers must ensure the moral, physical and economic integrity of employees. This means that such changes should not be issued in violation of any employee rights established under labor laws, let alone impair employee’s dignity and privacy.
So, any changes to employment contracts to be conducted by employers in the execution of their management power should not result from arbitrary, or retaliatory decisions. But, they should derive from actual and functional interests of the company. They should be based on objectively valid reasons. Also, these changes should not affect the essential conditions of the employment contract (time, place and specific way services should be provided, as initially agreed by the parties). Finally, management powers should not affect moral, material or economic interests of employees.
The Supreme Court of Justice of the Dominican Republic has provided several examples in connection with situations that have infringed the ius variandi principle. Such infringement may occur when the:
Employer unilaterally decides to change the conditions of the employment contract, thereby causing economic, material or moral damages;
Tasks specific to the job position are modified to the employee’s detriment;
Employee’s safety is at risk; or
Salary earned by the employee is cut in whole or in part.
The Supreme Court of Justice of the Dominican Republic has also stated that the unilateral modification of employees’ work schedules is considered a practice against the ius variandi because this aspect constitutes an essential condition of the employment contract.
In another decision, the Supreme Court of Justice of the Dominican Republic considered that changing the calculation method of employees’ salaries to move from a fixed and variable wage system to exclusively variable salaries constitutes a violation of the management power.
In conclusion, labor regulations currently in force in the Dominican Republic, especially article 41 of the Labor Code, prevents employers from unilaterally change employment contracts to the detriment of employees. A unilateral amendment of the employment contract that causes economic disadvantage to the specific employee will be null and void, under our Labor Code.
Then, when it exists the risk that the change to working conditions of the employee could be considered illegal, it will be necessary first to get the employees’ consent. Otherwise, the employee could file a lawsuit called “dimisión” or dismissal at court. This is a termination of the labor agreement by the employee due to employer’s violations of its obligations. In case the court ruled on employee’s behalf then the company will be ordered to pay severance which includes pre-noticed, unemployment, acquired rights and six months of salary as compensation.
Taking this into consideration, we suggest that when the company informs the employees the changes that the employer will make, explain clearly that the changes won’t affect the essentials conditions of the labor agreement and that these changes are no discriminatory for any person.
